Londoners blame rich foreigners for house price boom
by Will Dahlgreen in Front Page, London and Politics
Thu April 10, 2014 5:03 p.m. BST
Londoners believe that the biggest cause of soaring house prices is rich people from overseas buying top-end property – and 60% want to make it more difficult for them to do so
By now the London house price boom is inescapable: prices are up 11.6% from just a year ago; the price gap between property in the Capital and elsewhere is now 100% (the highest since records began); and the average home is expected to cost £600,000 by 2018.
At £458,000 the average house in London is now beyond the reach of large portions of society, and Londoners have made their minds up on who is responsible.
Although according to experts 85% of prime London property in 2012 was bought with overseas money, only three per cent of all London homes are bought by foreigners - by value, 6.5 per cent
However, when asked what the biggest reason for recent house price increases is, the largest group (49%) of Londoners say it is rich people from overseas buying top-end property as an investment.
Landlords taking on new buy-to-let properties in London are said to be charging twice as much rent as those in the rest of the country, and 40% of Londoners say people buying property as buy-to-let investment is the biggest cause of price increases.
The third biggest cause is increasing numbers of people wanting to move to a city with limited space, chosen by 34% of Londoners.
Of course, lying beneath it all is the shortage of supply; research published by the 33 local London authorities found that 809,000 new homes are needed by 2021 to meet existing and new demand.
In fact, in a series of 10 possible proposals for tackling London’s housing problems the most popular, supported by 66%, is encouraging London councils to build more social housing.
51% also support relaxing planning laws to make it easier for new housing to be built, but the rest of the proposals with majority support focus on demand rather than supply.
65% support adding new council tax bands for homes worth more than £1 million; 60% support making it more difficult for foreign investors to buy London property; 59% support extra taxes on second homes; and 55% support introducing rent controls so it is less profitable for people to buy-to-let.
The only unpopular proposals are making it more difficult for people to buy property as buy-to-let (supported 38-36%), allowing the building of more skyscrapers and high-rises so more housing can fit in the same space (opposed 43-33%) and taxing any profit people make on the sale of their main home (opposed 63-17%).
The housing boom is now spreading across the country, with activity at levels last seen in 2008; before the financial crisis. Although London is a special case, property prices in Manchester are actually rising faster than in the Capital. According to the Nationwide house price index, prices in Manchester rose by 18%, compared to 17% for London, in the first quarter of 2014.